Posted by Rich on November 04, 2006 at 20:25:51:
You might want to have the books gone over by a CPA. This will cost but its better than having the LLC invalidated because of too much co-mingling of funds or having expenses disallowed because of improper record keeping.
LCC and Corresponding Mess - Posted by Tyler
Posted by Tyler on November 01, 2006 at 12:07:08:
I am a minority member of an LLC (20% ownership) that was created to remodel outdated condos in our market. We hired one employee to manage the projects/ do the construction. My problem comes with the accounting methods of the majority owner. We purchased two condos each for $100,000. We closed on our first condo the beginning October. However, we did not begin remodeling until mid December because our employee was doing work at their daughter?s house. They correspondingly rolled the cost of his salary while working at their daughter?s house into the ?total cost? of remodeling our first unit. They also rolled the cost of establishing the corporation (accountant, lawyer fees, new tools, ect) into the ?total cost? of remodeling the first unit. Is this legal? I thought tools should be a company asset that can be depreciated?Instead, when a new tool was purchased it was applied to the ?costs? of the unit being remodeled.
There were some interesting maneuvers done on the financing side also. For reasons beyond me they put up cash ($135,000) that the bank placed into a CD to secure a line of credit of $135,000. The CD was accruing interest at approximately the same rate of interest we were being charged on the line of credit. So it was awash? However, the financial sheet shows a loss of over $1,000 per condo per month for holding each unit. HOA fee are $400 so they are claiming interest payments of $600 a month per unit. Hope this is clear enough? Any incite would be greatly appreciated. I already chalked this up as a learning experience. I would rather move on but one of the units sold for $160,000 and our employee was told there was no profits and was not entitled to his promised 5% of the profits per project. I have also received no income form this endeavor.
Thanks,
Tyler